Research Article of Journal of Modern Economy
To Examine Audit and Non-audit Fees Disclosed in the Annual Reports by Company and Industry
EachThis research aims to examine audit and non-audit fees disclosed in the annual reports by company and industry. Research questions are how audit and non-audit fees disclosed in German financial service companies? What are compositions of NAS fees in researched companies from 5 industries in 2015? What are trends of audit and non-audit fees in researched companies? And what are reasons behind trends? According to these questions, relative explanations and theories will be represented. The final research question is that are current regulations issued by the SEC, the PCAOB and the EC effective to eliminate adverse impacts of NAS? This research firstly examines how audit and non-audit fees disclosed in annual reports by company and industry, through investigating audit and non-audit fees in German financial companies and compositions of NAS fees in 61 companies from 5 industries in 2015, then observing trends of audit and non-audit fees in researched companies and exploring reasons behind trends. Finally trying to evaluate the effectiveness of regulations research issued by the SEC, the PCAOB and the EC. With regard to purposes to address these questions, since the topic of this research is about NAS, which cannot be comprehensively surveyed without the consideration of audit services, and they need to be compared with each other in the research process to arouse conclusions. Thus audit and non-audit fees are employed as the measurement of audit services and NAS provided by accountancy firms. Another important theme of this research is auditing regulations, as the final objective is to prove the justification of NAS, the effectiveness of legislations and regulations is evaluated, helping to get the conclusion.
Keywords: audit and non-audit fees, annual reports, company, industry
How to cite this article:
You Yu. To Examine Audit and Non-audit Fees Disclosed in the Annual Reports by Company and Industry. Journal of Modern Economy, 2018,1:4. DOI: 10.28933/jme-2018-01-1801
1. Abbott, L. J., Parker, S., Peters, G. F. (2011). Does mandated disclosure induce a structural change in the determinants of nonaudit service purchases? Auditing: A Journal of Practice & Theory, 30(2), 51-76.
2. Alexeyeva, I. (2012). Effect of different economic conditions on audit and non-audit fees: Evidence from Sweden Effect of different economic conditions on audit and non-audit fees: Evidence from Sweden (Master dissertation, Umeå School of Business and Economics)
3. Ashbaugh H, Lafond R, Mayhew B (2003) Do nonaudit services compromise auditor independence? Further evidence. Account Rev 78:611–639.
4. Beattie, V., Mcinnes, B., Fearnley, S. (2004). A methodology for analysing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes. Accounting Forum, 28(3), 205-236. doi: 10.1016/j.accfor.2004.07.001
5. Beaulieu, P., Reinstein, A. (2010). Belief perseverance among accounting practitioners regarding the effect of non-audit services on auditor independence. Journal of Accounting and Public Policy, 29(4), 353-373.
6. Beck, P. J., Wu, M. G. (2006). Learning by Doing and Audit Quality. Contemporary Accounting Research, 23(1), 1-30. doi:10.1506/axu4-q7q9-3yab-4qe0
7. Brandon, D. M., Crabtree, A. D., Maher, J. J. (2004). Nonaudit fees, auditor independence, and bond ratings. Auditing: A Journal of Practice & Theory, 23(2), 89-103.
8. Brennan, N., Saorin, E. G., Pierce, A. (2009). Impression Management: Developing and Illustrating a Scheme of Analysis for Narrative Disclosures – A Methodological Note. SSRN Electronic Journal SSRN Journal. doi:10.2139/ssrn.1284904
9. Chan, L., Chen, T., Janakiraman, S., Radhakrishnan, S. (2012). Reexamining the relationship between audit and nonaudit fees: Dealing with weak instruments in two-stage least squares estimation. Journal of Accounting, Auditing & Finance, 2, 299-324.
10. Chung, H., Kallapur, S. (2003) Client importance, nonaudit services, and abnormal accruals. Account Rev 78:931–955
11. Dhaliwal, D. S., Gleason, C. A., Heitzman, S., Melendrez, K. D. (2008). Auditor fees and cost of debt. Journal of Accounting, Auditing & Finance, 23, 1-22.
12. Duh, R., Lee, W., Hua, C. (2007). Non-audit service and auditor independence: An examination of the Procomp effect. Rev Quant Finan Acc Review of Quantitative Finance and Accounting, 32(1), 33-59.
13. Eilifsen, A., Knivsfla˚, K. H. (2013). How increased regulatory oversight of nonaudit services affects investors’ perceptions of earnings quality. Auditing: A Journal of Practice & Theory, 32(1), 85-112.
14. Fuentes, C., Pucheta-Martínez, M. C. (2009). Auditor independence, joint determination of audit and non-audit fees and the incidence of qualified audit reports. Academia. Revista Latinoamericana De Administración, 63-92.
15. Joe, J. R., Vandervelde, S. D. (2007). Do auditor-provided nonaudit services improve audit effectiveness. Contemporary Accounting Research, 24, 467-487.
16. Kinney, W. R., Palmrose, Z., Scholz, S. (2004). Auditor independence, non-audit services, and restatements: Was the U.S. government right? Journal of Accounting Research, 42, 561-588.
17. Lee, T. H., Ali, A. M., Bien, D. (2009). Towards an Understanding of the Audit Expectation Gap. The Icfai University Journal of Audit Practice.
18. Mitra, S. (2007). Non-audit Service Fees and Auditor Independence: Empirical Evidence from the Oil and Gas Industry. Journal of Accounting, Auditing & Finance
19. Nelson, M. W. (2006). Ameliorating Conflicts of Interest in Auditing: Effects of Recent Reforms On Auditors and Their Clients. Academy of Management Review, 31(1), 30-42.
20. Parkash M., Venable, (1993), Auditee incentives for auditor independence: The case of non-audit services, The Accounting Review, 68, pp. 113-33.
21. Robinson, D. (2008). Auditor independence and auditor-provided tax service: Evidence from goingconcern audit opinions prior to bankruptcy filings. Auditing: A Journal of Practice & Theory, 27(4), 31-54.
22. Singh, H., Woodliff, D., Sultana, N., Newby, R. (2013). Additional Evidence on the Relationship between an Internal Audit Function and External Audit Fees in Australia. International Journal of Auditing, 18(1), 27-39. doi:10.11 1/ijau.12009
23. Statista. Aggregated revenue of PwC from 2010 to 2015, by service line (in billion U.S. dollars). Retrieved March 28,2016, from 1. http://www.sta tista.com/statistics/189612/aggregated-revenues-of-pwc-by-service-2010/
24. Swanson, K. (2008). The Determinants of Audit Prices for Financial Services Institutions in the United States. Major Themes in Economics.
25. Tang, Q., Chen, H., Lin, Z. (2011). How to Measure Country Level Financial Reporting Quality? SSRN Electronic Journal SSRN Journal. doi:10.2139/ssrn.2114810
26. Tepalagul, N., Lin, L. (2014). Auditor Independence and Audit Quality: A Literature Review. Journal of Accounting, Auditing & Finance, 30(1), 101-121.
27. The OECD Competition Committee, Competition and Regulation in Auditing and Related Professions. (2009, December 15).
28. Deloitte Ireland, http://www2.deloitte.com/ie/en.html, KPMG in Ireland, https://home.kpmg.com/ie/en/home.html,EY,http://www.ey. com/IE/en/home, PwC, http://www.pwc. ie/
29. Foreign companies registered and report with the U.S. Security and Exchange Commitee. (n.d.). Retrieved December 31, 2013, from https://www.sec. gov/divisions/corpf in/internatl/foreigngeographic2013.pdf
30. PCAOB Cooperative Arrangements with Non-U.S. Regulators //. (n.d.). Retrieved July 12, 2016, from https://pcaobus. org/International/Pages/RegulatoryCooperation.aspx
This work and its PDF file(s) are licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.